Azerbaijan and Iran to Resume Oil Swap Agreement

Azerbaijan and Iran will in the coming days reinstate a bilateral oil swap agreement after a five year break due to sanctions levied against Tehran, Iran’s Deputy Oil Minister Rukneddina Javadi said Sunday.

“After a five year cessation, we will resume an oil swap with Azerbaijan. Iran will begin importing oil into our Caspian Sea ports and deliver an equivalent amount on behalf of our Azeri partners to the Gulf countries. The agreement will come into force in the coming days,” Javadi said.

The agreement was signed on February 23, during a visit to Iran by Azeri President Ilham Aliyev. During a meeting with his Iranian counterpart, Hassan Rouhani, Aliyev stressed the regional importance of joint Azeri-Iranian cooperation.

“The Caspian region is our common heritage. We must continue to cooperate in pursuit of regional safety and peace. At present, there is excellent work being carried out in the energy field. Cooperation in this area is not limited to Iranian-Azeri cooperation. Our neighboring countries may also join, which would turn the endeavor into a transnational, regional project.’’

Azerbaijan has repeatedly noted that Baku and Tehran now have several opportunities to expand their cooperation in the oil and gas sector after Iran actively participated in major investment projects in Azerbaijan.

The two respective governments have made significant recent moves towards closer cooperation as Iran prepares to re-enter the global market following more than a decade of international sanctions due to Tehran’s nuclear development program.

Azerbaijan’s economy has been reeling since the country’s central bank abandoned its dollar peg in mid-December 2015. The Azeri Manat has lost more than a third of its value against the greenback, due to the collapse of oil prices.

The energy-rich economies of the former Soviet Union, which enjoyed stability and economic growth over the past decade on the back of rising hydrocarbon revenues, have been ravaged by the sharp decline in oil prices.

Azerbaijan, Kazakhstan and Russia have all seen their economies shrink in the last year and their national currencies listed as some of the worst performing on international exchange markets.